Prediction Market Trading Bot

A multi-strategy trading bot that identifies pricing inefficiencies in prediction markets. Combines BTC 5-minute microstructure analysis with ensemble weather forecasting to trade on Kalshi and Polymarket. Features a professional React dashboard.

100% free to run - No paid APIs, no subscriptions. All data sources are free. Kalshi API key optional for Kalshi markets.

Overview

Strategy 1: BTC 5-Minute Up/Down

Scans Polymarket BTC 5-minute Up/Down markets every 60 seconds. Uses real-time 1-minute candle data from Coinbase/Kraken/Binance to compute RSI, momentum, VWAP deviation, SMA crossover, and market skew as a weighted composite signal. Trades when edge > 2%.

Strategy 2: Weather Temperature (Kalshi + Polymarket)

Scans weather temperature markets on Kalshi (KXHIGH series) and Polymarket every 5 minutes. Uses 31-member GFS ensemble forecasts from Open-Meteo to estimate the probability of temperature thresholds being exceeded. Trades when edge > 8%. Kalshi markets are auto-discovered via the KXHIGHNY, KXHIGHCHI, KXHIGHMIA, KXHIGHLAX, KXHIGHDEN series tickers.

Key Features

• BTC Microstructure Analysis - RSI, momentum (1m/5m/15m), VWAP, SMA crossover from real candle data
• Ensemble Weather Forecasting - 31-member GFS ensemble from Open-Meteo for probabilistic temperature predictions
• Multi-Platform Trading - Trades weather markets on both Kalshi (KXHIGH series) and Polymarket simultaneously
• Edge Detection - Identifies mispriced markets across both strategies and platforms
• Kelly Criterion Sizing - Fractional Kelly (15%) position sizing with per-trade caps
• Signal Calibration - Tracks predictions vs outcomes with Brier score
• Professional Dashboard - React 3-column dashboard with real-time updates
• Simulation Mode - Paper trading with virtual bankroll tracking and equity curves

Quick Start

1. Backend Setup

cd kalshi-trading-bot

# Create virtual environment
python -m venv venv
source venv/bin/activate  # On Windows: venv\Scripts\activate

# Install dependencies
pip install -r requirements.txt

# Run the backend
uvicorn backend.api.main:app --reload --port 8000

Backend will be at: http://localhost:8000 API docs at: http://localhost:8000/docs

2. Frontend Setup

cd frontend

# Install dependencies
npm install

# Run the frontend
npm run dev

Frontend will be at: http://localhost:5173

Architecture

┌──────────────────────────────────────────────────────────────────┐
│                          FRONTEND                                │
│  React + TypeScript + TanStack Query + Tailwind                  │
│  ┌──────────┐ ┌──────────┐ ┌──────────┐ ┌──────────┐            │
│  │Indicators│ │ Weather  │ │ Signals  │ │  Trades  │            │
│  │  + Chart │ │  Panel   │ │  Table   │ │  Table   │            │
│  └──────────┘ └──────────┘ └──────────┘ └──────────┘            │
└──────────────────────────────────────────────────────────────────┘
                              │
                              ▼
┌──────────────────────────────────────────────────────────────────┐
│                          BACKEND                                 │
│  FastAPI + Python + SQLite + APScheduler                         │
│  ┌───────────┐ ┌───────────┐ ┌───────────┐ ┌───────────┐        │
│  │  BTC      │ │ Weather   │ │  Signal   │ │Settlement │        │
│  │ Signals   │ │ Signals   │ │ Scheduler │ │  Engine   │        │
│  └───────────┘ └───────────┘ └───────────┘ └───────────┘        │
└──────────────────────────────────────────────────────────────────┘
                              │
                              ▼
┌──────────────────────────────────────────────────────────────────┐
│                        DATA SOURCES                              │
│  ┌──────────┐ ┌──────────┐ ┌──────────┐ ┌──────────┐ ┌────────┐ │
│  │Coinbase/ │ │Open-Meteo│ │  NWS     │ │Polymarket│ │ Kalshi │ │
│  │Kraken/   │ │ Ensemble │ │  API     │ │Gamma API │ │  API   │ │
│  │Binance   │ │  (GFS)   │ │          │ │          │ │(KXHIGH)│ │
│  └──────────┘ └──────────┘ └──────────┘ └──────────┘ └────────┘ │
└──────────────────────────────────────────────────────────────────┘

How It Works

BTC 5-Minute Strategy

1. Fetch 60 one-minute candles from Coinbase/Kraken/Binance (fallback chain)
2. Compute 5 indicators: RSI(14), Momentum(1m/5m/15m), VWAP deviation, SMA crossover, Market skew
3. Convergence filter: require 2+ of 4 indicators to agree
4. Weighted composite -> model UP probability (0.35-0.65 range)
5. Compare to Polymarket prices, trade the side with higher edge

Weather Temperature Strategy

1. Fetch open weather markets from Kalshi (KXHIGH series, RSA-PSS auth) and Polymarket (Gamma API)
2. Fetch 31-member GFS ensemble forecasts from Open-Meteo
3. Count fraction of members above/below the market's temperature threshold
4. That fraction = model probability (e.g., 28/31 members above 70F = 90% probability)
5. Compare to market price on either platform, trade when edge > 8%
6. Confidence = ensemble agreement (how one-sided the 31 members are)

Edge Calculation

edge = model_probability - market_probability

BTC signals require |edge| > 2%. Weather signals require |edge| > 8%.

Position Sizing (Fractional Kelly)

kelly = (win_prob * odds - lose_prob) / odds
position_size = kelly * 0.15 * bankroll

Capped at 5% of bankroll and $75 (BTC) or $100 (Weather) per trade.

API Endpoints

| Endpoint | Method | Description | |----------|--------|-------------| | /api/dashboard | GET | All dashboard data in one call | | /api/btc/price | GET | Current BTC price + momentum | | /api/btc/windows | GET | Active BTC 5-min windows | | /api/signals | GET | Current BTC trading signals | | /api/signals/actionable | GET | BTC signals above threshold | | /api/kalshi/status | GET | Kalshi API auth status + balance | | /api/weather/forecasts | GET | Ensemble forecasts for all cities | | /api/weather/markets | GET | Weather markets (Kalshi + Polymarket) | | /api/weather/signals | GET | Weather trading signals (both platforms) | | /api/trades | GET | Trade history | | /api/stats | GET | Bot statistics | | /api/calibration | GET | Signal calibration data | | /api/run-scan | POST | Trigger BTC + weather scan | | /api/simulate-trade | POST | Simulate a BTC trade | | /api/settle-trades | POST | Check settlements | | /api/bot/start | POST | Start trading | | /api/bot/stop | POST | Pause trading | | /api/bot/reset | POST | Reset all trades | | /api/events | GET | Event log | | /ws/events | WS | Real-time event stream |

Configuration

All settings in backend/config.py, overridable via environment variables:

BTC Settings

| Setting | Default | Description | |---------|---------|-------------| | SCAN_INTERVAL_SECONDS | 60 | BTC scan frequency | | MIN_EDGE_THRESHOLD | 0.02 | Minimum edge (2%) | | MAX_ENTRY_PRICE | 0.55 | Max entry price (55c) | | MAX_TRADE_SIZE | 75.0 | Max $ per BTC trade | | KELLY_FRACTION | 0.15 | Fractional Kelly multiplier |

Kalshi Settings

| Setting | Default | Description | |---------|---------|-------------| | KALSHI_API_KEY_ID | None | Kalshi API key ID | | KALSHI_PRIVATE_KEY_PATH | None | Path to RSA private key PEM file | | KALSHI_ENABLED | True | Enable/disable Kalshi market fetching |

Weather Settings

| Setting | Default | Description | |---------|---------|-------------| | WEATHER_ENABLED | True | Enable/disable weather trading | | WEATHER_SCAN_INTERVAL_SECONDS | 300 | Weather scan frequency (5 min) | | WEATHER_MIN_EDGE_THRESHOLD | 0.08 | Minimum edge (8%) | | WEATHER_MAX_ENTRY_PRICE | 0.70 | Max entry price (70c) | | WEATHER_MAX_TRADE_SIZE | 100.0 | Max $ per weather trade | | WEATHER_CITIES | nyc,chicago,miami,los_angeles,denver | Cities to track |

Risk Management

| Setting | Default | Description | |---------|---------|-------------| | DAILY_LOSS_LIMIT | 300.0 | Daily loss circuit breaker | | MAX_TOTAL_PENDING_TRADES | 20 | Max open positions | | INITIAL_BANKROLL | 10000.0 | Starting paper bankroll |

Supported Cities (Weather)

| City | Station | Tracked | |------|---------|---------| | New York | KNYC | Default | | Chicago | KORD | Default | | Miami | KMIA | Default | | Los Angeles | KLAX | Default | | Denver | KDEN | Default |

Add more cities by editing WEATHER_CITIES in config and adding entries to CITY_CONFIG in backend/data/weather.py.

Data Sources

| Source | Data | Used For | Auth | |--------|------|----------|------| | Coinbase | BTC 1-min candles | BTC microstructure | None | | Kraken | BTC 1-min candles | BTC fallback | None | | Binance | BTC 1-min candles | BTC fallback | None | | Open-Meteo | GFS Ensemble (31 members) | Weather probability | None | | NWS API | Observed temperatures | Weather settlement | None | | Polymarket | Market prices + resolution | Both strategies | None | | Kalshi | Weather temperature markets (KXHIGH) | Weather strategy | RSA key |

Project Structure

kalshi-trading-bot/
├── backend/
│   ├── api/
│   │   └── main.py                 # FastAPI routes + dashboard
│   ├── core/
│   │   ├── signals.py              # BTC signal generation
│   │   ├── weather_signals.py      # Weather signal generation
│   │   ├── scheduler.py            # Background jobs (BTC + weather)
│   │   └── settlement.py           # Trade settlement (routes by market_type)
│   ├── data/
│   │   ├── btc_markets.py          # Polymarket BTC market fetcher
│   │   ├── crypto.py               # BTC price + microstructure
│   │   ├── kalshi_client.py        #